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“House building fell to its lowest level for more than 60 years in 2009. Surveyors warned that housing starts were now running at more than 50% below the government’s own estimates of what is needed to satisfy projected housing growth”

Inside Housing 26 February 2010

The Residential Sector

• The UK has an increasing population, particularly in London and the South East. The UK population has just reached 61 million and the birth rate this year is the highest for 50 years. The UK population is predicted to increase to 72 million by 2020 (Source - Smiths Institute and PwC), resulting in an increasing demand for housing over the short, medium and long term.

• There is a substantial number of sites in London with planning consent which are stalled due to lack of debt funding, or lack of financial viability due to reducing capital values of the finished product in the short term. In the London Boroughs alone there are in excess of 170 consented schemes for 50 units or more, the majority of which have yet to start on site. These sites have a combined total of over 70,000 units to be built.

• The housing shortfall will reach 1 million homes by the end of 2010 (Source: Town & Country Planning Association). More than 1 million children are now in overcrowded housing, a rise of 54,000 in the past two years, according to Shelter, the housing charity. When the economy starts to recover there will be a strong upward pressure on house prices.

Growing Population, Limited New Housing Supply Lead to Strong Rental Demand

Residential Graph

The graph above highlights the reduction in the number of residential units under construction at present in the UK

The UK Now Has The Lowest Number of Housing Starts Since 1923/4

(Chartered Institute of Housing)